Vamos Locao (VAMO3), Brazils largest heavy-equipment rental firm, saw its shares drop 8.7% to R$4.40 ($0.73) on May 7 after reporting a 45.6% annual net profit decline to R$107.8 million ($18 million) for Q1 2025.The results, released May 6, revealed a company grappling with soaring interest rates while demonstrating operational resilience through strategic restructuring.
Revenue grew 24% year-over-year to R$1.33 billion ($222 million), driven by record leasing asset sales and service income.EBITDA rose 10.1% to R$886.7 million ($148 million), though both metrics fell short of analyst expectations.
The net profit collapse stemmed from R$290 million ($48 million) in financial expenses, exacerbated by Brazils 14.7% benchmark rate.Leverage improved slightly to 3.3x net debt/EBITDA from 3.6x.
This marks Vamos second quarter as a pure-play rental operator following Decembers spin-off of its dealership arm into Automob (AMOB3).CEO Gustavo Couto emphasized healthy demand across sectors, with agribusiness comprising 30% of operations.
Asset occupancy reached 85%, while used vehicle sales defied seasonal trends with an 82% revenue jump to R$290 million ($48 million).Vamos Shares Plunge 8% Amid Profit Crash Despite Operational Gains.
(Photo Internet reproduction)The companys 2025 guidance projects net profit of R$450550 million ($7592 million), 23% below consensus, and EBITDA of R$3.854.15 billion ($642692 million).
Capex will total R$22.2 billion ($333367 million), part of a R$5 billion ($833 million) asset-purchase plan.Vamos Faces Paradox of Operational StrengthsAnalysts note structural challenges: BTG Pactual highlights pressure from idle assets and margin compression, while Ita BBA praises reduced repossessions and R$700 million ($117 million) in renewed contracts.Investors face a paradox operational strengths clash with financial fragility.
The stock trades at 5.6x EV/EBITDA, a 40% discount to historical averages.BTG maintains a R$15 ($2.50) price target, betting on margin recovery, while Itas R$11 ($1.83) target reflects caution.
Vamos must now prove its R$1 billion ($167 million) Sempre Novo fleet-renewal program can offset Brazils harsh rate environment.Market skepticism persists despite 28.5% annual earnings growth since 2020.
The 8% single-day plunge erased R$900 million ($150 million) in market value, underscoring investor impatience with interest rate sensitivity.With 85% institutional ownership, Vamos fate hinges on executing its asset-light pivot while navigating Latin Americas costliest borrowing climate.